A recipe for expanding financial access through regulatory reform

With the global financial crisis still rippling across front pages of newspapers around the world, it may not seem like the moment to further open the doors to the financial system. But this gets it backward. As experts focus on shoring up financial regulation, this is precisely the moment to simultaneously craft a new financial framework that expands access to the billions of people who are currently unserved.

Just in time for this week’s Bank-Fund annual meetings in Istanbul, a timely new report outlines principles for creating a more inclusive financial sector. The report, the product of a high-level task-force convened by the Center for Global Development, lays out ten principles for financial-sector policymakers. (Full disclosure: I’m a task force member, but the initiative was ably led by the three co-chairs.)

Here are four:

  1. Promote entry of and competition among financial firms
  2. Build legal and information institutions and hard infrastructure
  3. Protect low-income and small customers against abuses by Financial Services Providers
  4. Ensure that usury laws, if used, are effective

They sound dry, but the report is concise and nuanced—and remarkably balanced. The principles steer clear of best practices and don’t claim to give step-by-step instructions. Instead they represent a set of ideas to aid policy debates and help steer implementation.